Page 112 - DMGT521_PROJECT_MANAGEMENT

Unit 7: Market and Demand Analysis

Inventory Management Notes

Using up-to-date demand forecast models, inventory management becomes a much simpler
task. The forecast models offer insight into when shifts will occur, but more importantly, how
big the shift will be. Using demand forecast models, inventory and human resources can be
properly planned and managed well in advance and with fewer surprises.

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Caution Once adequate predictive models are found, these models can then be used to
forecast demand. A demand forecast model may actually be an ensemble of multiple
models working together.

Self Assessment

State True or False:
7. Demand forecasting and estimation gives businesses valuable information about the
markets in which they operate and the markets they plan to pursue.
8. Forecasting and estimation are interchangeable terms that basically mean predicting what
will happen in the future.

9. In demand forecasting, as with most analysis endeavors, data preparation efforts are
critical.
10. Forecasting is the main resource in data mining; therefore it should be properly prepared
before applying data mining and forecasting tools.
11. Value series analysis is a statistical approach applicable for demand forecasting.

7.5 Technical Analysis

In this Section we will examine how the technical aspects of a typical project idea can be scrutinized
in detail to evaluate its technical feasibility, as distinct from commercial, financial, economic
and managerial feasibility. For the sake of comprehensiveness we will cover Environmental
Impact Analysis (EIA) also, as a part of this analysis.
While the various aspects to be examined will obviously vary from project to project, the
following summary covers the more common ones briefly:
1. Objectives: First, the project proposal must fall within the ambit of the stated mission of
the sponsor(s). Next the proposal must be able to further the objectives and priorities of
the sponsor(s). These must therefore be ascertained and clearly recorded, along with
detailed specifications for the output (product/service). Together, these constitute the
basic frame of reference for all future decisions.
The private sector would usually expect a project to earn a high enough profit, i.e. a stated
level of return on investment. Only for core projects (which are intended to basically
support other highly profitable projects) may this requirement be relaxed. In contrast, the
public sector generally has multiple objectives and profitability normally takes a back
seat. In either case, it is essential for the project analyst to keep the organisation’s objectives
- a along with their inter-se priorities - in sharp focus, to ensure that his efforts follow the
correct direction.
2. Location and site: Initially, as many locations as possible should be identified which meet
the most fundamental operational requirements of the proposed project. These should

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